Tesco slashes dividend and rushes in new boss

The supermarket warned on profits last month when former chief executive Phil Clarke quit. His replacement Dave Lewis (pictured) will now start on Monday, a month earlier than planned, as the group battles with tough trading conditions.

Chairman Richard Broadbent said Lewis would be ‘reviewing every aspect of the group’s operations’. ‘The board’s priority is to improve the performance of the group,’ he added.

'We have lost count of the number of times that we have downgraded out forecasts for Tesco over the last three years or so,' said analysts at Shore Capital.

'It is very disappointing to see this update, which fundamentally raises questions in our minds about the capability of the management under Mr Clarke at this once great company. As such we expect, as part of a range of measures, considerable management change under Mr Lewis in time, as Tesco needs a world class top team to take it forward.'

The FTSE 100 inched five points higher to 6,811 points. AstraZeneca (AZN) was the biggest riser on the index, on persistent speculation that US rival Pfizer will return with a fresh takeover approach. Pfizer made a series of failed bids for the company earlier in the year, and is now clear to make the first steps towards a new bid under takeover rules.

'Mid cap' stock Exova (EXO) was a big faller on the FTSE 250, dropping 10.4% to 194.3p after the material testing services provider reported a 2.7% fall in first-half revenue. Stricken Afren (AFRE) meanwhile fell 6.6% to 92.9p as the oil explorer announced the suspension of two associate directors for receiving unauthorised payments for the benefit of its chief executive and chief operating officer, who have already been suspended.

Fresh data meanwhile showed that inflation in the eurozone dropped to just 0.3% in August, down from 0.4% in July, despite cuts to interest rates in June.

'The very low inflation reading for August reinforces pressure on the European Central Bank (ECB) to consider further monetary stimulus on top of what is already in the pipeline,' said Martin van Vliet, economist at ING Bank.

'With inflation inching towards zero, the cushion against deflation is getting smaller and smaller. To be sure, based on current oil and food prices, headline inflation should start to pick up from October onwards. But it will likely continue to significantly undershoot the ECB's medium-term target. As such, there remains a compelling case for a more expansionary macroeconomic policy stance in the eurozone.'

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